A Publication of WTVP

With tax law change affecting Roth IRA conversions beginning in January 2010, much is being made of Roth conversions. It is important to note that annual contributions to a Roth IRA may also make sense. As with the traditional IRA, the most one individual can contribute to a Roth IRA for 2009 and 2010 is $5,000 each year. These limits are $1,000 higher for individuals age 50 or older. The most a married couple filing taxes jointly can contribute for 2009 or 2010 is $10,000. These limits rise to $12,000 if both individuals are age 50 or older.

How much you may contribute is limited for those above certain income levels:

You may simultaneously contribute to a traditional IRA, as long as the total placed into both accounts does not exceed the yearly limits. If you are married, the same amounts may be contributed for each of you to a spousal IRA.

A six-percent tax is charged on excess contributions (contributions over the legal maximum) to the account. This tax will apply to each year that the excess remains.

To determine how much you may contribute to your Roth IRA, use Worksheet 2-2 in IRS Publication 590. Always consult a tax advisor with questions specific to your situation. iBi